Hut 8 Mining Corp. (TSE:HUT) shareholders might be rather concerned because the share price has dropped 39% in the last month. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. Few could complain about the impressive 421% rise, throughout the period. So it is not that surprising to see the stock retrace a little. Only time will tell if there is still too much optimism currently reflected in the share price.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Hut 8 Mining went from making a loss to reporting a profit, in the last year.
When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.
Hut 8 Mining's revenue actually dropped 50% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that Hut 8 Mining has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Hut 8 Mining's financial health with this free report on its balance sheet.
A Different Perspective
Pleasingly, Hut 8 Mining's total shareholder return last year was 421%. That gain actually surpasses the 18% TSR it generated (per year) over three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Hut 8 Mining (1 doesn't sit too well with us!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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